"We are watching you": investigation of consumer-employee perception gaps and the employee expectations-employer performance gaps

Abstract

Based on the social contract theory and social exchange theories, this study examined the Corporations’ social responsibility (CSR) gaps perceived by fashion firms’ internal (i.e., employees) and external (i.e., consumers) stakeholders. In addition, to more deeply understand employees’ perspectives, this study empirically measured the CSR performance gap between employees’ expectations for the CSR standards the industry should achieve and employees’ perceptions of their employers’ CSR performance. This study then explored how the extent of negative incongruence (i.e., when the employer’s CSR performance does not meet the employee’s CSR standards) influenced employees’ attitudes and behaviors with the moderating role of the employees’ work experience. For this, we selected two global fashion firms: H&M and Nike. Through an online survey, 865 usable responses were collected (H&M retail employee n = 158, consumer n = 275; Nike retail employee n = 157, consumers n = 275). One-way Analysis of Variance and a post hoc test showed that the consumer groups for H&M and Nike indicated significantly lower levels of CSR perceptions than those of the employees of each brand. Moreover, the results of structural equation modeling revealed that negative incongruence between the expected industry standard and perceptions of the firm's performance in the area of CSR discouraged organizational commitment, which in turn decreased organizational citizenship behavior and increased turnover intentions. The moderating effect of work experiencewas not found. The originality of this study is that it quantitatively examined both internal and external stakeholders’ CSR perceptions and employees’ CSR perception gaps. The findings provide valuable academic and managerial implications.

Introduction

Corresponding to ethical business practices, the fashion industry strives to meet the standards set forth by sustainability initiatives. Corporate Knights, a magazine publisher, publishes a report of the Global 100 Most Sustainable Companies in the World (corporateknights.com) annually among the 6000 publicly listed companies. Fashion retailers, such as H&M, Inditex, Adidas, LVMH, and M&S, were included in the past lists, as these companies satisfied the 21 Key Performance Indicators (KPI) focusing on aspects of environmental, social, and governance relative to their industry peers. On the other hand, the Sustainable Brand Index is also known as Europe’s brand study on sustainability across 8 countries. Nike and H&M were included in the 100 sustainable brand list in the Netherlands (sb-index.com). Barron also focuses on ranking 100 America’s Most Sustainable Companies annually by assessing five key constituencies: shareholders, employees, customers, community, and the planet, among the 1000 largest publicly traded companies (Foster 2022). Fashion brands, such as PVH, Nike, Walmart, TJX Cos, Gap, and V.F. Corp., are listed in 100 lists of America’s Most Sustainable Companies (Foster 2022; Norton, 2019).

Despite their efforts, many fashion companies have still been involved in negative incidents impacting sustainability, raising awareness of the ethical transgressions of fashion businesses. For instance, some fashion retailers, such as Zara, Forever 21, and Fashion Nova, were recently exposed because of their poor working conditions, the use of blended materials that cannot be recycled, and using chemical dyes that pollute the water (Reichart & Drew, 2019; Yoon et al., 2020). Besides, Nike was bombarded in the 1990s as its suppliers were engaged in sweatshops and child labor. Due to constant issues engaging child labor by Nike’s suppliers, Nike had to make significant changes to their supplier selections and consider taking sustainability at the top of their lists (mallenbaker.net, 2016). Negative reports of social transgressions by major retailers, such as Nike and Gap, have triggered governments and consumer advocacy groups to pressure fashion companies to reduce harmful environmental impacts and make an effort for social justice worldwide (Ha-Brookshire, 2015). These violations of Corporations’ social responsibility (CSR) practices have prompted consumers and internal stakeholders to question whether or not these companies have made positive contributions to society (Yoon et al., 2020).

The social contract theory argues that corporations, as social members, must consider the welfare of society as a whole (McGuire, 1963). Corporations should consider seeking public consent by entering into an accredited societal relationship. The social contract between corporations and society is established through exchange relationships between the corporation, the community, and the natural environment (Byerly, 2014). CSR highlights organizational actions aligned with the triple bottom line of economic, social, and environmental performance while satisfying stakeholders’ expectations (Aguinis, 2011). CSR activities should meet internal (e.g., owners, employees, and suppliers) and external (e.g., governments, competitors, consumer advocates, environmentalists, and the media) stakeholders’ expectations, as well as be effectively communicated. Nevertheless, many corporations are still reluctant to express their sustainability efforts, and primary stakeholders (consumers and employees) are sometimes unaware or uninformed about corporations’ sustainability initiatives. This lack of awareness creates a CSR perception gap, leading consumers and employees to question the efforts companies actually make to enhance social well-being (Skarmeas & Leonidou, 2013). Therefore, this study attempted to explore how consumers and employees perceive fashion firms’ CSR performance (i.e., CSR perception gap hereafter).

Previous studies have predominantly focused on how consumers’ perceptions of CSR influence consumption behavior and attitudes toward companies, to explore the impact of these perceptions on sales (Farooq et al., 2019; Jung & Ha-Brookshire, 2017; Yoon et al., 2020). Although the roles and expectations of employees are equally important to an organization’s performance (Wolf, 2013), relatively few studies have explored how employees respond to the deviation of an organization’s CSR practices from the CSR standards expected in the fashion industry. According to the social exchange theory, this gap may foster employee skepticism toward their employers’ CSR policies and result in turnover intentions (Archimi et al., 2018; Rupp et al., 2006). Given that firms’ CSR initiatives may produce intense and immediate reactions in employees (Gopalakrishna-Remani et al., 2022), it is vital to understand the consequences when a company’s CSR activities do not meet the CSR standards of the fashion industry (i.e., CSR performance gap hereafter) (Rupp et al., 2013).

Grounded in the social contract and social exchange theories, this study explored the CSR perception gap between employees (i.e., internal stakeholder group) and consumers (i.e., external stakeholder group) of fashion firms. Then, by focusing on employees’ perspectives, we empirically estimated the CSR performance gap between employees’ perceived norms of CSR in the fashion industry and the CSR activities of their employers. We tested how this gap influences employees’ attitudinal and behavioral outcomes.

Literature Review

Social contract theory: CSR perception gap between internal and external stakeholders

Social contract researchers have argued that organizations have inclusive obligations and responsibilities toward society, generating interdependencies involving the relationships, responsibilities, and rights of society’s members. The idea of the social contract has developed progressively, and it involves organizations’ obligation to consider the welfare of society as a whole due to the substantial influence of corporations (Freeman, 1984; McGuire, 1963). Based on these views, scholars have argued that corporations should seek public consent by conveying an accredited relationship with society. In other words, the social contract between corporations and society must involve exchange relationships between the corporation, community, and the natural environment (Byerly, 2014). Embracing the idea of social norms as the set of society’s ethical principles, the social contract theory claims that all corporations are ethically obligated to enhance the welfare of society by satisfying consumers’ and employees’ interests and must not violate any general canons of justice. Moral norms for corporations can be determined by whether they positively or negatively affect such parties. Based on the idea that the authority of ethical principles comes from the agreement of those affected, moral duty for corporations under the social contract theory is thought to account for the benefits of two key groups: employees and consumers (Wempe, 2005).

Meanwhile, Rupp et al., (2013) argued that “how employees perceive the CSR of their employer may have direct and stronger implications for employees’ subsequent reactions than actual firm behaviors of which employees may or may not be aware” (p. 897). Groves and LaRocca, (2011) posited that the ethical values of organizations’ leaders are strongly related to employees’ expectations and beliefs that the organization cares about stakeholders and thus develops CSR initiatives to meet their needs. Vlachos et al. (2014) also supported the idea that leadership styles and managers’ involvement in implementing CSR strategies can influence employee behaviors and perceptions of CSR. Therefore, researchers have highlighted that the importance of CSR, and CSR implementation must be considered when executives and employees perceive and respond to corporate social acts because both objective and subjective measures of organizational performance can be affected by CSR (Lee et al., 2013; Rupp et al., 2013).

Moreover, consumers are among the most critical stakeholders who may be of central concern to CSR reports, as they are essential to a corporation’s long-term survival (Jung & Ha-Brookshire, 2017). Consumers increasingly expect firms to commit to CSR initiatives, and thus they evaluate companies and products in terms of how well they meet or do not meet their CSR goals (Oberseder et al., 2013). From the consumers’ perspective, productive organizations should be accountable for reducing “pollution and the exhaustion of natural resources, the lack of employee accountability on consumers, and the exploitation of power for personal gain or in ways that destroy the society” (Hsieh, 2015, p. 435). Furthermore, the social contract expects organizations to prioritize consumers’ interests above and beyond their stockholders. The social contract also expects that organizations’ purpose for existence should be to benefit all members of society (Donaldson, 1982). Thus, it is vital to consider consumers’ expectations toward CSR activities since the gap between their expectations and a corporation’s sustainability activities can negatively affect the company’s performance (Jung & Ha-Brookshire, 2017). In this light, corporations and constituencies must be considered interrelated members of an ongoing community with an obligation to act responsibly toward one another (Russo & Perrini, 2010). Similarly, Freudenreich et al., (2020) acknowledged that each stakeholder should play an active role in creating value and determining the success of an organization.

However, our understanding of the consistency of CSR expectations and how they vary between consumers and employees is limited. Hence, this study proposed a new framework for CSR perception gaps that incorporates the two key stakeholders’ evaluations of CSR initiatives. Highlighting the existence of possible gaps in perceived CSR performance between internal (i.e., employee) and external (i.e., consumer) stakeholders, four theoretically possible cases are suggested. The four cases of CSR evaluations by two stakeholders have been categorized as (1) CSR success, when both employees and consumers have high CSR evaluations, (2) CSR failure, when both employees and consumers have low CSR evaluations, (3) Over-marketed CSR, when employees have low evaluations, yet consumers have high evaluations, and (4) Under-marketed CSR, when employees have high evaluations, yet consumers have low evaluations. With this framework, this study attempted to explore the employee-consumer perception gap in CSR with empirical datasets. Specifically, we measured employees’ and consumers’ evaluations of the focal brand's CSR activities and estimated the difference to determine which quadrant the cases belonged to. As such, RQ1 was formed:

RQ1. What is the current state of the CSR perception gap among fashion firms as perceived by the two primary stakeholders (employees and consumers)?

Employees’ perceptions toward CSR performance gaps and organizational commitment

The social exchange theory is one of the most influential theories to recognize workplace behavior involving a series of interactions that engender specific duties (Emerson, 1976). Blau, (1964) explained that social exchange relationships develop when corporations “take care of employees,” with beneficial consequences. That is, employees may implement specific behaviors as an exchange strategy to repay the support they perceive from their organization (Archimi et al., 2018; Blau, 1964; Roeck & Maon, 2018). Such relationships are mutual, collaborative, and communal; the exchange process can be terminated instantly when the two sides recognize that the relationship is not mutually constructive (Archimi et al., 2018; Blau, 1964). Hence, the positive relationship between employer and employee generates a foundation for a long-standing social exchange, which develops into a firm trust in and preference for the organization (Cropanzano & Mitchell, 2005). As long as each party stands by specific systems and rules of exchange, the fundamental principles of the social exchange theory postulate that specific interactions foster trusting, loyal, and mutual commitments (Cropanzano & Mitchell, 2005; Saks, 2006). In this regard, employees’ perceptions of CSR may be reflected in discretionary activities, which develop into communal relationships as an exchange of social benefit (Slack et al., 2015). This implies that a solid and positive relationship may lead one entity to become committed to another (Cropanzano & Mitchell, 2005).

Organizational commitment is defined as “a bond or link between an individual and the organization (s)he works for” (Trivellas et al., 2019, p. 268). Allen and Meyer, (1990) found that organizational commitment is comprised of three components (affective, continuance, and normative commitment), and involves a set of beliefs, emotions, and an inclination to act in a specific manner. In particular, this study deemed affective organizational commitment the most relevant in the context of CSR (e.g., Bizri et al., 2021; Khaskheli, 2020; Rodrigo et al., 2019). This mode of commitment was defined as an emotional attachment to the organization when the organization’s goals, values, and activities cause employees to enjoy being a part of it, which can develop into an intention to stay (Allen & Meyer, 1990; Rodrigo et al., 2019). In other words, employees evaluate themselves based on their memberships in social groups, including the organization they work for (Trivellas et al., 2019). Consequently, employees are likely to feel proud of being a part of socially responsible organizations, thus boosting organizational commitment (Fu et al., 2014).

Conversely, suppose employees do not perceive their employers’ CSR as efforts “to improve the welfare of its internal and external stakeholders” (p. 785). This perception will be negatively reflected in employees’ behavior and attitudes (John et al., 2019). In this vein, we posited that if employees perceive their employer’s actual CSR as underperforming compared to their expectations, this may generate a CSR perception gap. In other words, according to the social exchange theory, if the CSR perception gap is deepened, employees may feel that the organization and its leaders are untrustworthy, resulting in low commitment to the firm (Archimi et al., 2018). Therefore, H1 was proposed:

H1. When a firm’s CSR performance does not meet employees' expected CSR standards for the industry (negative incongruence), it negatively affects their commitment to the firm.

The moderating role of work experience

Previous literature has addressed that CSR could substantially advance organizational commitment (Rego et al., 2010; Stites & Michael, 2011). In addition to CSR, several demographic variables, such as age, work experience, organizational tenure, and position tenure, have been positively associated with organizational commitment (Lok & Crawford, 2001). Mathieu and Zajac, (1990), and Gregersen and Black, (1992) found that more extended work experience is positively linked to attitudinal commitment, whereas the length of service positively influences behavioral commitment. Likewise, Allen and Meyer, (1993) emphasized that work experience and tenure could positively affect organizational commitment. That is, employees with extensive work experience may have a higher organizational commitment due to job independence encumbrances than employees with little experience (Brimeyer et al., 2010). Similarly, Kristof-Brown et al., (2002, 2005) support that occupational experience and service period in an organization can significantly elevate organizational fit and commitment. A recent study by Kim et al., (2018) also found that position and work experience could influence CSR and organizational commitment. In addition to job independence and commitment perspectives, we also posited that when employees have worked in an industry for a longer period of time, they would be more likely to have a higher level of tolerance for a negative CSR gap because they are accustomed to such negative industry practices. Therefore, a greater number of years working in retail may decrease the effects of negative CSR perceptions and organizational commitment. Therefore, H2 was proposed:

H2. Longer work experience mitigates the negative effect of negative incongruence on organizational commitment.

Consequences of organizational commitment

Organizational commitment has been predominately studied to understand positive behavioral performance by engaging organizational citizenship behavior, resulting in psychological attitudes such as job satisfaction and decreased turnover intentions (Bentein et al., 2005; Devece et al., 2016; Meyer et al., 2002; Wagner, 2007). This study focused on the positive consequences of organizational commitment as exhibiting organizational citizenship behavior and diminishing turnover intentions by synthesizing previous literature (e.g., Harris et al., 2014; Kleine et al., 2019).

Organizational citizenship behavior (OCB)

Organizational commitment significantly influences employee behaviors such as organizational citizenship behavior, motivation, and counterproductive behaviors (Devece et al., 2016; Meyer et al., 2002). Inconsistencies between evaluations and actions creates a gap in the way in which sustainability is perceived by organizations, which diminishes employees’ commitment (Garcia-Torres et al., 2017). However, when employees are strongly committed to their firm, they are likely to exhibit citizenship behavior that strives to help accomplish their organization’s goals (Meyer et al., 2002). Organizational citizenship behavior is defined as “individual behavior that is discretionary, not directly or explicitly recognized by the formal reward system, and that in the aggregate promotes the effective functioning of the organization” (Organ, 1990, p. 4). Previous studies have found this association in the CSR context (Aguilera et al., 2007; Hansen et al., 2011; Rupp et al., 2006). When employees perceive their current company’s CSR efforts as genuine, they develop a solid communal relationship with their employers and enact discretionary and voluntary behaviors to help their firms (Rupp et al., 2013; Vlachos et al., 2014; Yoo et al., 2019). John et al., (2019) and Farooq et al., (2017) also found that when employees perceived CSR, they tended to engage in organizational commitment, enhancing organizational citizenship behavior. Thus, this study suggested H3:

H3. Employees’ commitment to their firms increases their organizational citizenship behavior.

Turnover intentions

Organizational commitment has been studied as a predominant antecedent of employees’ turnover intentions (Bentein et al., 2005; Wagner, 2007). Turnover intention refers to “the integrated performance of not being satisfied with the work, the idea of leaving, the intention of looking for other work, and the possibility of finding other work” (Gatling et al., 2016, p. 185). Although numerous studies have found that both job satisfaction and organizational commitment have a significant impact on turnover intentions (Farooq et al., 2017; Gatling et al., 2016; Mathieu et al., 2016), Griffeth et al., (2000) argued that organizational commitment is a more critical factor in determining turnover intention than job satisfaction. Thus, we deemed that negative organizational commitment strongly leads to turnover intention (Joo & Park, 2010; Mathieu et al., 2016). In this vein, H4 was proposed:

H4. Employees’ commitment to their firms decreases their turnover intention.

The research model with hypotheses is presented in Fig. 1.

Fig. 1

Proposed Hypotheses to Test the Effect of Employees’ CSR Performance Gap. * p < 0.05

Methods

Sampling and data collection

Upon approval from the Institutional Review Board (IRB-2014705 MU), a professional research firm, Qualtrics, was commissioned to collect data via an online survey distributed within the U.S. in 2019. To assess the possible gap between employees’ and consumers’ CSR activities in the focal firm and between employees’ expected CSR standards and the employer’s CSR activities, we selected fashion companies actively engaging in CSR initiatives by referring to the Corporate Knights’ Global 100 Most Sustainable Companies (corporate knights, 2018, 2019) and the Sustainable Brand Index, (2019). Among fashion brands listed on these lists, considering the availability of employee data, H&M and Nike were finally chosen. For consumer data, a screening question was provided at the beginning of the survey to ensure that participants were aware of these brands, and then they were randomly assigned to one of them. For employee data, the online survey company used an established panel pool and extracted subjects working for one of these brands during data collection. Full-time retail employees with more than 1 year of experience in their current position were recruited to ensure that respondents were familiar with their employer’s CSR initiatives. A monetary incentive ($70 per employee and $5 per consumer) was provided for each respondent upon successfully completing the survey to enhance the response rate. As a result, a total of 865 usable responses were obtained (H&M employee n = 158, consumer n = 275; Nike employee n = 157, consumers n = 275). Table 1 presents the characteristics of the sample.

Table 1 Demographic characteristics of the samples

Measurements

This study borrowed reliable scales from previous studies to measure all major variables. Each item used to measure the variables was measured on a 7-point Likert scale. The survey first asked questions to determine the participants’ perceptions of the CSR performance of the assigned brand. For example, for the consumer groups, we asked the question, “How well do you perceive that H&M (Nike) is doing with each of the following activities?” and provided 20 activities (Jung & Ha-Brookshire, 2017). To the employee groups, we provided the question, “How well do you perceive your firm is doing (and/or making an effort) with each activity?” and listed the same 20 activities. To the employee groups, individuals’ general expectations of the CSR standards of the fashion industry were also asked regarding the same 20 CSR activities with the question, “Based on your general belief, please indicate how much the fashion industry has to do regarding each activity.” Then, negative incongruence perceived by employees (i.e., CSR performance gap) was calculated by subtracting the firm’s CSR performance from their expected CSR standard for the fashion industry. Thus, a larger value indicated a more significant negative incongruence, meaning the firm is perceived as underperforming in its CSR compared to employees’ expectations for fashion businesses.

The employees’ commitment toward their firms, or organizational commitment, was measured with eight items (Allen & Meyer, 1990; Gao-Urhahn et al., 2016), and ten items for organizational citizenship behavior were also included in the survey (Podsakoff et al., 1990; Spector et al., 2010). Turnover intentions were measured with five items (Bozeman & Perrewe, 2001). Demographic variables such as age, gender, education, income level, and years of retail experience were also measured with closed-ended items.

Results

CSR perception gap between employees and consumers

In order to answer RQ1, one-way Analysis of Variance (ANOVA) and a post hoc test was conducted. The results showed that a perceived CSR gap indeed existed between consumers and employees (F = 46.49, p < 0.001) (Table 2). Specifically, H&M and Nike’s consumer groups indicated significantly lower levels of CSR activities than those of the employees of each brand (M_{Nike consumer} = 4.53, M_{H&M consumer} = 4.57, M_{Nike employee} = 5.64, M_{H&M employee} = 5.25). Moreover, Nike employees revealed significantly higher CSR perceptions than H&M employees, and no differences were found between the consumers of these brands. This result suggested that for H&M and Nike, the type of CSR perception gap between consumers and employees may fall under the ‘under-marketed CSR’ category, indicating that consumers perceived lower CSR levels than the employees.

Table 2 CSR perception of employees and consumers

CSR performance gap between employees’ expectations and employer’s performance

This study examined what causes an employee to perceive a discrepancy between what they expect as the industry CSR standard and how their employer performs (Table 3). With the data obtained, we grouped the responses as demonstrating either positive incongruence (i.e., the firm’s performance is greater than the expected industry standard), congruence (i.e., the firm’s performance is the same as the expected industry standard or CSR Success) or negative incongruence (i.e., the firm’s performance does not meet the expected industry standard). Then, this study conducted a crosstab analysis with a Chi-square statistic. The results revealed that the responses from both brands showed similar patterns but chi-square value was statistically significant (χ² = 7.48, df = 2, p = 0.02); the negative incongruence group had the largest number of respondents in both brands (H&M = 85, 53.8%, Nike = 79, 50.3%), followed by the positive incongruence (H&M = 67, 42.4%, Nike = 59, 37.6%) and congruence groups (H&M = 6, 3.8%, Nike = 19, 12.1%).

Table 3 CSR performance gap between employees’ expectations and their perceptions of their employer’s performance

Consequences of employees’ CSR performance gap

Confirmatory factor analysis

To examine the employees’ CSR performance gap and its consequences, the structural equation modelling method was used in IBM AMOS 25.0. Based on Anderson and Gerbing’s, (1988) two-step approach, the measurement model fit was first assessed by Confirmatory Factor Analysis (CFA), which confirmed the reliability and validity of the measurement model. One item of OCB and two items of TI had factor loadings lower than the acceptable threshold of 0.5 (Hair et al., 2009); thus they were deleted, and CFA was conducted again (Table 4). The results showed that the measurement model fit the data fairly well (χ²/df = 2.65, p < 0.001, CFI = 0.92, TLI = 0.91, RMSEA = 0.07), as all standardized factor loadings were higher than 0.5, indicating satisfactory convergent validity (Hair et al., 2009). Cronbach’s α ranged from 0.83 to 0.91, and composite reliability (CR) ranged from 0.66 to 0.83 for all constructs, suggesting acceptable reliability. For discriminant validity, we found that the square root of the AVE values of any construct was greater than the correlation estimates between the constructs in all cases (Fornell & Lacker, 1981), which suggested the measurement model was valid (Table 5). In addition, multi-group Confirmatory Factor Analysis (MGCFA) ensured measurement invariance between the responses from the two brands. First, configural invariance was confirmed with the acceptable fit of an unconstrained model (χ²/df = 2.12, CFI = 0.89, TLI = 0.87, RMSEA = 0.06). Second, metric invariance was verified by comparing the measurement weights of the constrained and unconstrained models (Δχ² = 24.84, Δdf = 17, p > 0.05). Third, scalar invariance was also confirmed, which tested for the equality of the intercepts of the constructs (Δχ² = 6.46, Δdf = 4, p > 0.05). Therefore, we deemed that the measurement model had the same structure and meaning between the two samples, and this study combined the two samples for subsequent analysis.

Table 4 Confirmatory factor analysis of the measurement model

Table 5 Correlation analysis among the major constructs

Common method variance

The Common Method Variance (CMV) issue was checked, as CMV can indicate systematic measurement errors, which can either escalate or devalue the observed relationship between constructs (Chang et al., 2010). We conducted Harman’s single-factor test (Podsakoff et al., 2003), and the results showed that the single factor did not account for most of the variance (39.56%). Then, applying the common latent factor (CLF) method revealed that the difference between the standardized regression weights with and without CLF was zero. Thus, we determined that the CMV issue was not problematic to the results.

Structural equation model: hypothesis tests

The covariance based-structural equation modeling (CB-SEM) method was used to test the hypotheses with IBM Amos 25.0 (Fig. 2). For the constructs measured by multiple items (organizational commitment, organizational citizenship behavior, and turnover intentions), this study used composite scores by averaging the items. Also, in order to minimize multicollinearity, an independent variable (i.e., the CSR perception gap) and a moderator (i.e., work experience in the retail industry) were standardized into Z scores. The model fit indices were satisfactory (χ²/df = 2.45, p < 0.001, CFI = 0.91, TLI = 0.90, RMSEA = 0.07). This study found that employees’ CSR performance gaps negatively affected their organizational commitment (β = − 0.64, p < 0.001), supporting H1. That is, when employees perceived that their firm’s CSR performance did not meet their general expectations for the CSR standard of the industry, they demonstrated low commitment to their firm. In this relationship, however, the moderating role of work experience was not found (β = 0.01, p > 0.05), and thus H2 was not supported. As expected, organizational commitment increased the respondents’ organizational citizenship behavior (β = 0.56, p < 0.001) as well as decreasing turnover intentions (β = − 0.60, p < 0.001), fully supporting H3 and H4. The respondents who were committed to their organization tended to exhibit voluntary and discretionary actions in order to enhance the firm’s performance and were less likely to show an intention to leave the firm.

Fig. 2

Results of Hypothesis Tests Model fit. χ²/df = 2.45, p < 0.05, CFI = 0.91, TLI = 0.90, RMSEA = 0.07. The CSR performance gap was calculated by subtracting the firm’s CSR performance from their expected CSR standard for the fashion industry. Thus, a larger value indicated a greater negative incongruence. * p < 0.001

Furthermore, a bootstrapping method estimated the indirect effects of the CSR perception gap as well as work experience on organizational citizenship behavior and turnover intentions through organizational commitment. This study specified 2000 bootstrap samples, and a bias-corrected percentile method was used to find the significance of the effects (Preacher et al., 2007). Table 6 presents the decomposition of the total, direct, and indirect effects of the major constructs. The indirect effects of the CSR perception gap and work experience on organizational citizenship behavior and turnover intentions were significant, respectively. This finding suggested the mediating role of organizational commitment in this structural model.

Table 6 Total, direct, and indirect effects of the major constructs

Discussion

Based on the CSR perceptions of two primary stakeholders, consumers and employees, this study theorized four quadrants as CSR success, CSR failure, Over-marketed CSR, and Under-marketed CSR. Aligned with these four quadrants, the study’s findings presented the perceived performance of two fashion brands as “under-marketed CSR,” which reflects a higher degree of employees’ CSR evaluations than those of consumers. As internal actors who make decisions on policies and strategies, employees assessed their employers’ CSR as being higher than did consumers, suggesting the efficacious communication of CSR performance. To create communicative connectedness between organizations, media, and stakeholders, companies may wish to adopt globally recognized third-party certifications (e.g., GOTS, Better Cotton Initiatives, Certified B-Corp, and Fair Trade), and strive for transparency across the entire supply chain (Abbas & Shipin, 2022).

One of the unique contributions of this study to academia is that it quantitively examined employees’ CSR perception gaps by recruiting current employees from some of the largest fashion companies in the world. Ha-Brookshire (2015) argued that if these corporations are truly looking to shift towards sustainability, important stakeholders such as employees should know this and act as ambassadors to disseminate their firms’ CSR activities. The importance of internal stakeholders’ CSR perceptions is increasing, given that most young cohorts have claimed that they would demonstrate greater loyalty to companies affiliated with environmental and social initiatives (McKinsey & Company, 2019). The results of this online survey of 315 U.S. employees working for two global fashion retailers showed that more than half of the respondents had a negative correlation between their expectations of CSR standards in the fashion industry and their firm’s CSR performance. In support of Blau’s, (1964) social exchange theory, our findings also showed that a CSR performance gap among employees relates to how they react to and behave towards an organization, primarily through decreased organizational commitment. Since CSR practices are intended to benefit both stakeholders and society, employers’ CSR practices and efforts should empower employees and make them feel supported and valued (Archimi et al., 2018; Roeck & Maon, 2018). Therefore, we recommend that companies not neglect employees’ perceptions of and support for CSR.

To foster ethical initiatives for employees, it is critical for them to internalize their employers’ ethics as genuine (Collier & Esteban, 2007; Pellegrini et al., 2018). Therefore, when employees are training for new positions, organizations should educate them on how they plan to implement ethical business practices and to further shift toward sustainability by sharing the company’s goals and plans for CSR. This will help each company member to act in a way that accomplishes the company’s CSR goals by making decisions as to their in-role responsibilities, becoming a part of CSR activities, and displaying more positive attitudes and voluntary behaviors toward their employers. Without clear communication within the organization, employees may think their current company’s true intention is only to maximize profit while using CSR as a marketing tactic, thereby inspiring poor CSR performance and unclear and ambiguous CSR communications to consumers. Moreover, this indicates that the fashion industry’s CSR performance and current organizations’ CSR practices and efforts should be consistently implemented and conveyed to reduce employees’ CSR performance gaps. This may require benchmarking the most sustainable fashion companies or/and other sustainable corporations in different industries so CSR practices and efforts can be consistently implemented throughout organizations. In this way, the fashion industry may slowly start to shift toward true sustainability.

This study also found that organizational commitment can increase organizational citizenship behavior while decreasing turnover intentions, further supporting the findings from previous literature (Devece et al., 2016; Meyer et al., 2002; Rupp et al., 2013; Vlachos et al., 2014; Wagner, 2007). Fundamentally, CSR practices and initiatives implemented by organizations embrace philanthropy and support good causes in society and within organizations that aim to enhance employees’ psychological and emotional well-being (Gond et al., 2010; Lu et al., 2022). For instance, CSR initiatives focusing on employees’ psychological and emotional well-being, such as human rights protections, diversity policies, and work-life balance programs, may increase organizational commitment, as employees will perceive that they are valuable to the organization, causing them to engage in organizational citizenship behavior and favor working at the company.

In conclusion, employees’ judgments of a company’s CSR efforts are essential during the implementation CSR initiatives; therefore, employees’ perceptions could be more central than even formal CSR assessments (McShane & Cunningham, 2012; Rupp et al., 2013). Furthermore, when CSR is not communicated well within and throughout an organization, employees may feel disconnected from its CSR activities (Schminke et al., 2014) and adopt specific actions and behaviors based on their judgment of how the organization provides for them (Rhoades & Eisenberger, 2002). In this sense, CSR must be executed through policy implementation and messages to employees that it is essential to the organization.

Conclusions

The importance of ethical practices is increasing in many different industries, particularly in fashion, pressuring primary stakeholders (consumers and employees) to evaluate whether or not fashion corporations are as highly engaged in practicing business ethics as they say they are. In this regard, this study empirically measured two different types of CSR gaps. First, it identified the existence of a CSR perception gap between consumers (i.e., external stakeholders) and employees (i.e., internal stakeholders) of H&M and Nike, respectively. Second, focusing on employees’ perceptions, this study assessed the CSR performance gap between what employees expected and what they observed of their employer’s CSR performance. Then, we investigated how the discrepancy between employees’ expectations and perceived CSR performance influenced their emotional (i.e., organizational commitment) and behavioral reactions (i.e., organizational citizenship behavior, turnover intention).

In spite of its valuable findings, this study had a few limitations, which can offer future research opportunities. First, this study only surveyed employees from two fashion retailers, and the results should not be generalized to other fashion retail corporations. Future research can expand to other fashion corporations striving to shift toward CSR, considering that fashion retailers such as Athleta, Eileen Fisher, and Allbirds have demonstrated a solid commitment to people, society, and the planet (McKinsey & Company, 2019). Second, to better understand CSR performance gaps, future research can include other internal actors in different positions, including executives, CEOs, and other leaders. In this way, CSR performance gaps among employees can be compared to those of the companies’ leaders to understand the effectiveness of CSR efforts and practices in an organization. Also, by comparing the CSR performance gaps between general employees and those in upper-level positions, one could discover how employees internalize ethical values to benefit an organization’s financial and CSR performance.